no agency relationship or it may pertain to exclusive right to sell in a particular territory diba, so there is an exclusive he is considered an exclusive agenct to sell a particular brand in the province of Iloilo, there is actually no agency relationship created, it is done only in an exclusive right to sell a particular brand / product in a territory .
Distinguishing Contact of Agency from other Contract and other Legal Relationship
Consider the characteristics of a contract of agency as a contract and as a legal relationship business organization.
CHARACTERISTICS OF A CONTRACT OF AGENCY
Q: Real? Formal?
A: Definitely it is not a real contract and also not a formal contract.
1. Consensual - conclude that it is consensual contract. It is perfected by mere meeting of the minds as to the object and consideration of the contract.
2. Principal - Why it is a preparatory contract?
This is a distinct feature of agency similar to partnership, they are both preparatory contracts, they can stand on their own don’t depend on any other contract for their validity, which means that even if the agent did not enter into another contract, which means he did not perform their obligation it doesn’t mean that the contract of agency is void, he may be held liable to such other contract for not performing his obligations, this is an agency in problems pertaining to agency, you should always consider the facts that normally, 2 contracts involved, you have to deal with the requisite of both contracts, in order to enable to reach the correct conclusion, this is the principal - agent with the contract of agency and second contract will be the contract entered into by the agent with the third person, this other contract may be a lease, sale, or any other contract an act made by the agent.
As of Principal contract, it can stand on its own even if the agent did not enter into another contract
Q: Now, is this contract similar to sale as to cause, in that it is also essentially an onerous contract?
A: No, but it is presumed to be for compensation, presumed to be onerous, however it may be deemed gratuitous. Gratuitous also different from partnership, because partnership is essentially onerous, a partner will always have to contribute
something, now after this a nominate contract - commutative contract.
As distinguished from other legal relation, you have to go into the feature of a contract of agency, how it is created? Then you will know, for example that is different from other legal relationships, which are created by operation of law like, negotiorum gestio, agency and negotiorum gestio may be similar in the sense that there is representation in its legal relationship but they can be distinguished as to their manner of creation in that agency is created by mere agreement of the parties, negotiorum gestio created by operation of law.
A feature of agency which is peculiar is representation.
No representative in a contract - he cannot be considered as an agent.
Nielson vs. Lepanto Minning (LM)
Held: While there was a claim by LM that there is an agency, the SC ruled that not a contract of agency. Nielson has no power of representation to bind LM with third person even it has power to buy certain items he still has to obtain or seek the opinion or approval of the BOD of the LM in order to buy certain items, which means he is not really an agent as to their has no right of representation.
But a feature which would make agency similar to partnership
It is based on trust and confidence that there are fiduciary obligations of an agent as much as there are fiduciary obligations of a partner unlike in sales or other legal relationships which are not based on trust and confidence.
Another very important feature of Agency is the manner of termination.
This is unusual for a contract that it can be terminated at will by the principal agent, maski sino. If the termination was made by the principal, it is called revocation. if made by the agent it is called withdrawal.
Mariano Case
To extend the contract of one party over another - in agency the principal has almost full control of the agent, he can give specific instructions to the agent, on how the obligations are to be performed, the manner of the obligations, the remedies performed, with whom, where it is to be performed, lahat, that would be the extent of the control of the principal over the agent.
But as held in the case of control of one party over another which only goes into the result, it cannot be considered as a contract of agency but it may be considered a contract for a piece of work.
Another important feature as to effect of delivery of the thing
If there is a transfer of ownership upon delivery of one party to the other party, that is not a contract of agency. In a contract of agency, when the principal delivers the thing to the agent, only possession is transferred to the agent, ownership is retained by the principal (owner) in fact in agency to sell, an agent who was not able to sell he has the right to return the goods to the seller.
Whether there was a stipulation as to there would be no transfer of ownership despite the delivery of the goods from one party to another, and ownership of the goods, first party will only be terminated upon the sale of the goods to a third person, despite another stipulation stating that there is no agency relationship created between the parties. The SC ruled actually principal agent ang relationship nila.
2 concepts similar in agency and partnership Both of them are business organizations, both are based on trust and confidence, there would be normally a representation, however the very important distinction between the two - in partnership, there is a juridical personality created separate and distinct from that of the individual partner. In agency, despite the perfection of a contract of agency, wala sila pa rin, the only personalities would be that personality of the principal and the personality of the agent.
Some authors would classify contract of agency into three:
1. Actual agency 2. Apparent / Ostensible 3. Estoppel
1. Estoppel
Kang Case
Facts: Flores appears to have full control in a restaurant (Washington Café) owned by Kang and in the administration of the restaurant he bought certain items from Mack - items needed for restaurant. But a portion / price was not paid by Flores. So Mack (seller) went after the owner of the restaurant. The only defense raised by the owner was that Flores was not his agent.
Take note: It is very difficult to prove actual agency, because an agreement between 2
persons, eh kung verbal lang ang agreement dun, how would you be able to prove?
Held: The owner of the restaurant can be held liable by estoppel because he clothed Flores with full power as if he had the authority to buy those items necessary for the administration of the restaurant. Aside from that, Mack was able to prove pieces of evidence - like in the lease agreement over the building where the restaurant was located and comes the owner of the restaurant as lessee and Flores signed as an agent of the lessee with all these the SC ruled that the owner of the restaurant is liable under the Principle of Estoppel.
2. Apparent / Ostensible
Rallos Case
Facts: Letter was sent by B to X, informing X that A has the authority to enter into a contract with X specifically to obtain goods from X, like copra, abaca which goods will be sold by A. After the sale a portion can be deducted as a commission and the rest to be delivered to X. After a certain period, the goods obtained by A from X remained unpaid.
In other words, A will get the goods from X. A did not deliver the proceeds of the sale. X demanded payment from B. The defense of B was as of that moment from that certain period he has already revoked the authority of the agent and therefore be bound by any contract entered into by A in representation of B with 3rd person. Is the claim of B tenable?
No, 1873 so far as 3rd person are concerned, this notice itong letter nya kay X remain in full force and effect until it is rescinded in the same manner it was given.
Q: What if B was able to prove that he posted the notice in Manila Bulletin - notice of fact of revocation of A. If there was such publication of notice, would the ruling of the SC be different?
A: No, still the same (Article 1873) (See phraseology of 1873)
Q: What if in this problem he had actual knowledge of the revocation even if he did not receive the letter eh under 1873 he should be sent a letter in order that the revocation of authority of A will be effective as to third person?
A: If the 3rd person has actual knowledge of the revocation, it is bad faith on his part to continue transacting with the agent. The agent acting on behalf of the principal and thus he should not be allowed to recover.
Pwede nabasa yung publication, informed by phone, telephone conversation but it is very hard to prove because the word of the principal is against the 3rd person.
As far as 3rd person are concerned they would have the right to believe that the agency has the authority until they have receive a notice in the same manner that he received notice as to the authority of the agent.
Q: In agency by estoppel / apparent agency, is there really an actual agency existing?
A: It does not matter, the principal can be held liable under the Principle of Estoppel because it is very hard to prove the existence of the actual agency. It can only be the principal in estoppel that can be held liable. Just like in apparent / ostensible agency sa totoo lng it is possible that he did not revoke the authority pwede pa din diba, pwedeng kunwari nirevoke na niya just to avoid liability to 3rd person but that is a matter or a claim that he already revoked. Pati mga letter, halimbawa even assuming the principal held a letter to the agent that letter can be easily denied kunwari, pinadala nya 3 months ago pero ngaun lng pinadala nilagay nya lng ung date nung unang panahon. Thus, it only protects 3rd person. Thus, 1873 is included in the law in agency.
3. Actual Agency
The law itself classifies actual agency into – as to manner of creation, express or implied. There is no problem with express agency.
A. Express Agency - it is a kind of agency wherein the consent of both parties is expressly given.
B. Implied Agency - were the consent of one of the parties was only impliedly given on the part of principal.
Dela Pena vs. Hidalgo
Facts: Dela Pena authorized Hidalgo to administer his properties in the Philippines, He has to leave the country. Hidalgo managed the properties of Dela Pena, after a while he has to leave the country also and go to Spain for health reasons. So he appointed another person, another Hidalgo to administer said properties of Dela Pena and wrote a letter to Dela Pena informing him of the appointment of another person to replace him as the administrator of his property. Dela Pena received a letter, he did not reject the appointment, he did not question the acts of the new administrator. After a while he died and his heirs (Dela Pena heirs) filed an action against Hidalgo
(the 1st agent) for accounting, damages etcetera for the period after the appointment of the other agent.
Issues: (1) Who was then the agent during the period?; (2) Can the 1st agent be held liable after the appointment of another administrator?
Held: From the silence of the principal, due to his inaction, due to his failure to repudiate the acts of the substitute, he is thereby deemed impliedly consented to the appointment of another person as the new agent, therefore implied agency was created.
This goes to implied agency pertaining to the principal because of the silence of the principal, because of lack of action of principal, because of failure to repudiate the acts of another principal, na alam nyang was acting on his behalf.
Q: However, is this rule applicable also to the agents or to the other party? Concretely, if a person was asked to administer the property of another or to sell the property, and he said nothing - by his silence, by his inaction, may he be deemed to have accepted agency?
A: Not necessarily, thus under the law, you have to make distinction to determine the scenario under which the said appointment was made, okie! The law would say when the 2 parties are absent, and when the 2 parties are present.
When 2 parties are absent - 1 is in Manila and the other is in Cebu.
When 2 parties are present - present in the same room
(A) 2 persons present - present in the same conference hall
Q: When both parties are within the same conference hall, A said to B that he would sell his (B) parcel of land in Cagayan De Oro City but that B did not react, he just stared at the speaker, nakatingin lng sya, he said nothing, by his silence would have deemed the agency?
A: No.
Q: But if B delivered a special power of attorney to A, sabi nya “Here is the SPA, I am authorizing you to sell my parcel of land in Cagayan De Oro City”. The SPA was accepted by B but he said nothing, basta tinanggap na lng nya, deemed impliedly consented to that agency?
A: Yes.
(B) If 2 persons are in different place, one in Manila and the other one in Cebu
Q: What if A was in Manila B in Cebu. A asked B to be his agent to sell a parcel of land and B did not say anything, wala lng, is B considered to have impliedly consented as an agent?
A: No.
Q: But this time again a SPA was sent by A (Manila) through DHL to B (Cebu) which was accepted / received by B, now he did nothing by his inaction, by silence he is deemed to have accepted the agency?
A: Not necessarily, it will depend on the nature of the business of B, kung ang negosyo, again under the facts in the Special Power of Attorney he was authorized to sell the parcels of land of A, if B was in the business of piggery / poultry ay walang kinalaman yan sa selling of a parcel of land. He will not be considered to have impliedly accepted the agency. However, if B is a real estate broker, talagang ganun yung negosyo nya di ba, buying and selling parcels of land, then and only then on his silence, he is deemed to have impliedly consented to the agency.